Art market analysis: Who benefits from charity auctions?

A common refrain is that there are too many of these events, with too much low-value art

Sotheby’s 2008 auction for Bono’s Red charity raised $42.6m (the auction house took a 10% commission)

The auction Artists for Haiti, organised by New York’s David Zwirner gallery and Christie’s, takes place on 22 September. It is perhaps the most ambitious charity event since Sotheby’s 2008 auction for the rock star Bono’s Red charity, which finances Aids, tuberculosis and malaria programmes in Africa. The Haiti sale includes high-value, new work by artists such as Luc Tuymans and Jeff Koons.

There are similarities between the two events: Red’s $42.6m total—the result of a perfect confluence of strong market, blue-chip artists, and a celebrity-driven cause—wouldn’t have been possible if Damien Hirst, after a meeting with Bono, hadn’t approached artists including Banksy, Jasper Johns and Julian Schnabel. In Artists for Haiti’s case, Zwirner, after a trip to Haiti with the actor Ben Stiller who works with charities in the region, also opened up his contacts book.

While not all charity auctions are on the scale of Artists for Haiti or of Christie’s forthcoming Japan relief sale with Takashi Murakami (date yet to be confirmed), the dealers give up their time and the auctioneers conduct them, gratis. While the likes of Christie’s and David Zwirner become involved in charity auctions out of corporate responsibility, there are some additional fringe benefits. Such events are good for public relations and can help in winning business: existing and potential clients are often involved in charitable organisations. And they are a good deal for collectors too. Although New York State requires sales tax, there is no buyer’s premium. One exception was the Red sale, for which there was some financial incentive for Sotheby’s, which took a 10% buyer’s commission (below its usual 12% to 25% rate, but a fee nonetheless). Collectors who donate a work get a tax deduction on its full market value; buyers get one on the difference between the retail value of a piece and what was paid above it.

Charity auctions have been around for a while. Sotheby’s decorative arts specialist Robert Woolley, who died in 1996, became a star charity auctioneer in the 1980s and 1990s. Lydia Fenet at Christie’s says there was a huge increase in charity auctions in the boom years between 2000 and 2008. Then, hedge fund money made for more visible events, such as the star-studded Robin Hood Foundation Gala, but these suffered during the downturn. Recently fundraising events have increased again, despite the still flailing economy.

They differ from normal public auctions. Alcohol is served, buoying moods. Auctioneers are not obliged to abide by the regulations (and the New York State laws) that govern regular auctions, including following specific bidding increments, so have more sway for drawing out bids.

This can influence the market. It’s unusual that artist records are set, but after the Red sale, there were 17, including Banksy at $1.9m and Howard Hodgkin at $792,000 (both still the artists’ auction records). Because it was at Sotheby’s, these results are listed on Artnet (most charity auctions are not) where there is no obvious sign it was a charity auction. This is misleading: who knows if these prices would have been achieved in a standard public auction?

Benefit sales are not always ideal for dealers or artists, however. A common refrain among dealers is that there are too many of these events, packed with too much low-value art. (Zwirner is keeping Artists for Haiti to a modest 26 lots of expensive, mainly primary market work.) Some institutions’ boards do not come out in support, leading to lacklustre results. Dealers and artists do not want to turn anyone down—dealers are swayed by collectors who are trustees at institutions; artists feel indebted to spaces that helped their careers. Neither do they want to donate second-rate pieces, since influential people will see these flop. Still, there are complaints about second-tier “benefit art”; some artists get asked so often that they’ve made large edition pieces for donations. In June, Mat Gleason, an art critic for the Huffington Post, advised artists: “Don’t ever donate your art to a charity auction again.” Artists who donate receive a tax deduction only on the cost of materials. And dealers want to control markets, making any auction problematic.

But charity auctions can have their advantages for dealers too: well-run events like Dallas’s Two x Two for Aids and Art, which benefits the American Foundation for Aids Research and the Dallas Museum of Art, and Aspen Art Museum’s Artcrush (whose 3 August auction was conducted by Sotheby’s Tobias Meyer) attract high-profile collectors and give artists exposure. Artists are flown in and given an opportunity to network with collectors and curators. The first lot in Aspen this year was a new painting by New York artist Rashid Johnson, whose work had never appeared at public auction. It jumped to $52,000, more than double its market value of $24,000.

Such results can recycle money into the system. After Augusto Arbizo of New York gallery 11 Rivington arranged for a donation by his artist Katrin Sigurdardottir to Two x Two, organisers sent underbidders his way, who went on to buy from him. “Most of the time the good [events] understand what they’re asking and know how often these artists are being asked,” said Arbizo. “They are OK with being politely told ‘no’ every once in a while. It benefits the non-profit [institutions] and it’s good for the artist. There are some collectors who go to these things who don’t make it to the gallery.”

Art advisor Allan Schwartzman also extols auctions like Two x Two, started by his client Howard Rachofsky, and says they can be opportunities to collect. But he also warns that non-profits “have had difficulty getting substantial work donated because they become the buying ground of bargain hunters”—there are often no reserves—“and often things given for worthy causes are sold to speculators who bring them to day sales a few years later”.

In rare instances benefit auctions, like that of New York alternative space The Kitchen, which supports emerging artists, allow artists to take a portion of the sale price. This can bring in good-quality pieces. Last November The Kitchen’s event featured pieces by rising stars Tauba Auerbach and Jacob Kassay, both coming off the back of strong results at auction earlier that month: at Phillips, a pair of works on paper by Auerbach sold for $17,500, and a painting by Kassay, estimated at $6,000 to $8,000, made $86,500. At The Kitchen, a painting by Auerbach sold for over five times its stated $8,000 retail value, and Kassay’s painting soared past its $14,000 value to make $94,000. It is unknown whether either of these artists had asked for a portion of the sales price, but, ironically, far from getting a measly tax deduction on materials, they stood to make more from their work at a benefit auction than they would have if they had sold it through a dealer.

Comments

24
Oct
11
21:52
CET

SCOTT CAMERON, WILMINGTON

Benefit shows are often a great way for artists to gain recognition, but too often artists get a bad shake financially. It's better for benefit organizers to 'offer' to provide artist contributors with a reasonable share of the net profits realized. Absurd, really! Ask yourself why you're involved with a benefit auction in the first place...isn't it in part to advance art, or is it merely to make a cheap buck from a resource too often at a disadvantage especially in hard economic times.
Name the' for the relief of artists' benefits you have heard of lately, yea none!
Come on, the majority of artists in this country are scrapping the bottom of the barrel. Help the art community as you would help yourselves, it's just as sexy.
A fair share...what's so bad about that.

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